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Tighter budgets force CIOs to do 'less with less'

Oct. 14, 2013 - 06:00AM   |  

Agencies will have fewer information technology dollars to spend over the next five years as sequester budget cuts shrink overall discretionary spending, according to an annual industry forecast.

The forecast, released Monday by TechAmerica Foundation, projects automatic budget cuts that took effect in March will continue through fiscal 2014 and beyond. Civilian and defense IT spending are pegged at $70.0billion this year, down from $73.5 billion last year.

Annual IT spending over the next five years is projected to reach $78.5 billion, of which $42.1 billion will go toward civilian agencies. The modest increase in overall IT spending amounts to a compound annual growth rate of 2.3 percent due to inflation, according to the forecast.

“IT is now fighting for dollars the same way personnel is, real estate, fleet vehicles, salary increases, [and] training, said Robert Haas, a spokesman for the foundation. “And it’s all in the same buckets.”

Much of the IT spending will go toward maintaining existing systems. Any savings from cost-cutting efforts are often used to meet sequester targets and can’t be reinvested, Haas said. Agencies are having to consider scaling back technology migrations to newer systems and investments in new IT that may improve operations but not provide immediate savings.

The tone of agency CIOs has also changed compared with previous years, he said.

“Doing more with less was something that they were told that they needed to do, and I think many valiantly tried,” he said. “There was a resignation that we’re going to be doing less with less.”

The forecast is based on data analyses and interviews with federal executives, congressional oversight committees, think tanks and industry. It doesn’t take into account ramifications of reaching the debt limit or the current government shutdown but does anticipate Congress will eventually pass a temporary continuing resolution at sequester levels.

The Defense Department is poised to absorb 50 percent of the sequester cuts, with areas like procurement and research, development, test and evaluation projected to take double-digit cuts, said TechAmerica Foundation spokesman Trey Hodgkins.

DoD procurement dollars are expected to decrease about 5 percent to $60 billion, and RDT&E funding is projected to drop 10 percent from $90 billion to $81 billion, according to the forecast.

The forecast projects DoD’s base budget will drop below $500 billion through 2016 and increase to $551 billion in fiscal 2019, as the department absorbs overseas contingency operations funding into its base budget.

“We’re facing a series of negative forces,” Hodgkins said.

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